Quick Comparison
| DJSI (Dow Jones Sustainability Indices) | MSCI ESG Ratings | |
|---|---|---|
| Scope | Sustainability index family selecting top ESG performers per industry | ESG rating system covering companies and securities globally |
| Applicability | Largest companies by market cap invited to the S&P Global CSA | 8,500+ companies and 680,000+ equity and fixed-income securities |
| Key Focus | Index inclusion—selecting sustainability leaders for investment benchmarks | Rating companies on ESG risk management relative to industry peers |
| Methodology | Best-in-class selection from S&P Global CSA scores | Proprietary ESG key issue framework with AAA-CCC letter ratings |
| Output | Index membership (in/out) plus S&P Global ESG Score | Continuous rating on a seven-point scale |
| Owner | S&P Dow Jones Indices (using S&P Global CSA data) | MSCI Inc. |
What is the DJSI?
The Dow Jones Sustainability Indices, launched in 1999, were the first global sustainability benchmarks for investors. The DJSI family—including DJSI World, DJSI North America, DJSI Europe, DJSI Asia Pacific, and DJSI Emerging Markets—selects the top-performing companies on ESG criteria within each industry from the S&P Global Broad Market Index universe.
Selection is based on the S&P Global Corporate Sustainability Assessment (CSA), an annual questionnaire covering 80-120 industry-specific ESG questions across environmental, social, and governance dimensions. The top-scoring companies in each industry—typically the top 10-20% depending on the index—earn inclusion. Companies must score above their industry's threshold to enter and maintain membership.
DJSI inclusion has become one of the most sought-after sustainability recognitions in corporate circles. Companies feature DJSI membership in annual reports, investor presentations, and sustainability communications. The annual September announcement of DJSI constituent changes generates significant corporate attention. Beyond prestige, DJSI membership signals to investors that a company is among the ESG leaders in its sector—a meaningful differentiator in a market where ESG integration is standard practice.
The DJSI has also faced criticism. The best-in-class approach means that companies in inherently high-impact industries—oil and gas, mining, tobacco—can qualify if they outperform sector peers on ESG management. Critics argue this dilutes the index's sustainability credibility by including companies whose core business activities are environmentally or socially harmful, regardless of how well they're managed.
What is MSCI ESG?
MSCI ESG Ratings evaluate companies on their management of financially material ESG risks and opportunities. The methodology identifies key ESG issues for each industry based on what MSCI determines to be financially material, then assesses companies on their exposure to those issues and the quality of their management response. Ratings range from AAA (Leader) to CCC (Laggard) on a seven-point scale.
MSCI's ESG ratings serve as the foundation for a large family of ESG indexes—MSCI ESG Leaders, MSCI ESG Universal, MSCI SRI, MSCI Climate indexes, and many more. These indexes power hundreds of ESG ETFs and index funds globally, making MSCI's rating decisions directly consequential for capital allocation. When MSCI upgrades or downgrades a company, it can trigger index rebalancing that moves actual investment dollars.
The MSCI methodology is relative—companies are rated against industry peers, not against an absolute standard. This means a fossil fuel company can achieve AAA if it manages ESG risks better than other fossil fuel companies. Similarly, a technology company might receive a mediocre rating despite low absolute environmental impact if its data privacy or labor management practices lag peer companies. The peer-relative approach ensures differentiation within every industry but raises the same best-in-class concerns as the DJSI.
Key Differences
1. Index vs. Rating. DJSI is fundamentally an index—a list of constituents selected for inclusion in an investable benchmark. MSCI ESG is a rating—a score assigned to every covered company regardless of index implications. Every company MSCI covers gets a rating; only top performers make it into the DJSI. This distinction means DJSI is binary (in or out), while MSCI ESG is continuous (seven grades of differentiation).
2. Data Collection Method. DJSI selection relies on the S&P Global CSA—a comprehensive company-submitted questionnaire that companies actively complete. MSCI ESG Ratings are based primarily on MSCI's own research using public disclosures, regulatory filings, and media monitoring, supplemented by company engagement. The CSA captures more proprietary company data; MSCI's approach is more independent but potentially less comprehensive.
3. Granularity of Signal. MSCI's seven-point rating scale (AAA to CCC) provides more differentiation than DJSI's binary in/out signal. An investor can distinguish between an MSCI AAA company and an A company, both of which might qualify for DJSI inclusion. For portfolio construction purposes, MSCI's continuous rating allows finer-grained ESG tilting and weighting.
4. Index Product Ecosystem. MSCI has built a far larger ecosystem of ESG index products. Hundreds of ETFs and index funds track MSCI ESG indexes, representing hundreds of billions in AUM. The DJSI has fewer associated investment products and benchmarks less total capital. This means MSCI rating changes have larger direct capital flow implications than DJSI constituent changes.
5. Update Frequency. DJSI constituents are reviewed annually, with changes announced each September. Between reviews, the index is static. MSCI ESG Ratings are updated on a rolling basis throughout the year, with material events triggering ad hoc reviews. For investors wanting real-time ESG signals, MSCI's continuous updating is more responsive.
6. Prestige vs. Utility. DJSI inclusion carries disproportionate corporate prestige—it's a stamp of approval that companies actively pursue and celebrate. MSCI ESG ratings have more practical utility for portfolio construction—they power the indexes, ETFs, and screening tools that actually allocate capital. Many companies are more focused on their DJSI status for communications purposes and their MSCI rating for investor relations purposes.
7. Transparency. S&P Global publishes the CSA methodology, industry weightings, and company scores through the S&P Global Sustainability Yearbook. MSCI publishes its key issue framework and general methodology but maintains proprietary scoring algorithms. Both provide detailed feedback to rated companies.
Which One Do You Need?
For corporate sustainability teams managing ESG strategy, both matter—but for different reasons.
DJSI membership is a communications and benchmarking tool. Pursue it if your company values the recognition, wants the strategic insight from the CSA process, and operates in an industry where DJSI membership is a competitive differentiator. The CSA itself—regardless of whether you achieve DJSI inclusion—produces valuable internal insights and benchmarking data.
MSCI ESG ratings are an investor relations and capital markets tool. Your MSCI rating directly affects whether ESG-focused indexes include your stock, whether ESG ETFs hold your shares, and how institutional investors perceive your ESG risk management. Managing your MSCI rating—through accurate disclosure, proactive engagement, and addressing identified gaps—has direct financial implications.
For investors, MSCI ESG indexes offer the broader product ecosystem for passive ESG strategies. DJSI provides a prestige-based best-in-class selection useful for concentrated sustainability-focused allocations. Many institutional investors use both: MSCI ESG indexes as core ESG benchmarks and DJSI as a supplementary sustainability lens.
Council Fire's Perspective
We advise clients to distinguish between the ESG ratings that influence capital allocation (MSCI) and the assessments that drive internal improvement and external recognition (DJSI/CSA). Both are valuable, but confusing their functions leads to misallocated effort.
Companies that dedicate enormous resources to the CSA for DJSI inclusion while neglecting their MSCI profile are optimizing for prestige while missing the capital markets signal. Companies that focus exclusively on MSCI while ignoring the CSA miss the most comprehensive ESG benchmarking tool available. The strategic approach is to use the CSA process to identify and close gaps, then ensure those improvements are reflected in the public disclosures that MSCI and other rating agencies analyze.
Frequently Asked Questions
If my company is in the DJSI, does that guarantee a high MSCI ESG rating?
No. DJSI inclusion and MSCI ratings use entirely different methodologies, data sources, and scoring frameworks. A company can be a DJSI constituent (top CSA scorer in its industry) while holding a mediocre MSCI rating if MSCI's key issue assessment identifies different material factors or evaluates management quality differently. Research shows moderate but imperfect correlation between the two—they agree on clear leaders and laggards but diverge frequently in the middle.
Which has more influence on stock price?
MSCI rating changes tend to have more measurable market impact because they trigger rebalancing in ETFs and index funds with hundreds of billions in assets. DJSI constituent announcements generate corporate communications activity and media coverage but less direct capital flow. Academic research on ESG rating-related stock price effects has found statistically significant responses to MSCI rating changes, particularly downgrades, while DJSI inclusion/exclusion effects are less consistently documented.
How many companies are in the DJSI World vs. MSCI ESG indexes?
DJSI World includes approximately 300-350 companies selected as the top ESG performers from the S&P Global BMI universe of the 2,500 largest companies. MSCI ESG indexes vary widely—the MSCI World ESG Leaders Index includes approximately 700+ companies (the top half of ESG ratings in each sector), while the MSCI ESG Universal Index includes nearly the full MSCI World universe with ESG-adjusted weights. MSCI's broader inclusion criteria mean more companies are captured, while DJSI's stricter selection makes inclusion more exclusive.
Should I complete the S&P Global CSA even if I don't expect DJSI inclusion?
Yes. The CSA serves multiple purposes beyond DJSI selection. S&P Global ESG Scores are published in the Sustainability Yearbook and used by investors independent of DJSI index tracking. The CSA process produces detailed industry benchmarking that helps identify relative strengths and weaknesses. And S&P Global ESG Scores increasingly feed into credit analysis and other S&P products. Even companies outside the top selection tier benefit from the assessment's diagnostic value and the public score it generates.
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